There are two identity routes, and you pick one
The S/4HANA connection offers two alternatives for identity, and you do not fill in both. The first is a username and password; that user has to be defined as a communication user on the S/4HANA side, not an ordinary end-user account. The second is an OAuth2 token; if you connect with a token, the username and password fields stay empty.
Which one you choose largely depends on your organisation's policy. The token route is generally preferred because it is unaffected by user password changes; the password route is faster to set up.